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TMI Blog2024 (8) TMI 855X X X X Extracts X X X X X X X X Extracts X X X X ..... ount. Petitioner has been handling several assignments of CIRP as delineated in the petition. 2.2. Through order dated 04th July, 2019, National Company Law Tribunal ["NCLT"] appointed Petitioner as an Interim Resolution Professional and his appointment was later confirmed as the Resolution Professional by the Committee of Creditors ["CoC"] in the CIRP of the Corporate Debtor. The CoC, consisting of State Bank of India and Bank of Baroda, approved the Resolution Plan on 15th February, 2021 which is pending approval before the NCLT. 2.3. Upon complaints of ex-employees of the Corporate Debtor, on 21st October, 2022, IBBI issued a Show Cause Notice ["the First SCN"] against the Petitioner and after considering his reply, the Disciplinary Committee of IBBI ["the Disciplinary Committee"] passed an order dated 17th February, 2023, closing the proceedings by not issuing any directions to the Petitioner. 2.4. The ex-employees of the Corporate Debtor raised concerns regarding the Disciplinary Committee's decision, alleging collusion between the Resolution Professional and the Disciplinary Committee. In view of these allegations, IBBI conducted fresh investigation against the Petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered in the first round pursuant to First SCN, the Impugned Order is ex-facie misconceived and arbitrary. Reliance is placed on the judgment of Supreme Court in Dr. Chetkar Jha v. Viswanath Prasad Verma & Ors. 1970 AIR 1832., and Hari Vishnu Kamath v. Syed Ahmad Ishaque and Others 1955 AIR 233. 3.4. As regards eligibility of Mr. Sushant Chabbra as a Joint Resolution Applicant, Petitioner has conducted due diligence within the confines of his duties and has not violated any provisions of the Code. This is evident from the First SCN, where Disciplinary Committee gave no directions regarding the issue of the introduction of Mr. Sushant Chabbra as a Joint Resolution Applicant. 3.5. The Impugned Order erroneously held that Petitioner has concealed facts from CoC, which is entirely misconceived and untenable. All the facts pertaining to Corporate Debtor were discussed during the CoC meeting which have also been recorded and circulated amongst the members of CoC. RESPONDENT'S ARGUMENTS 4. Per Contra, Ms. Madhavi Diwan, Senior Counsel for Respondent presents the following facts and contentions: 4.1. Although the contraventions invoked in the First SCN would overlap with Second SCN, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on applicant Conquerent was nowhere found mentioned therein though Mr. Chabbra was present in the meeting in his capacity as member of suspended management of the CD. A copy of the minutes of 10th CoC meeting is annexed as Annexure-E. ii. It is, however, observed from the minutes of the 12th CoC meeting held on 10-09-2020, that Mr. Sushant Chabra was also one of the partners in the resolution plan submitted by Conquerent. iii. The minutes of the 10th and 11th meetings of CoC reflects that Mr. Sushant Chhabra was present in all these meeting as a suspended Director of the Board and was privy to presentations and discussions on the Resolution Plan of the competing Prospective Resolution Applicant Suncare Formulations Pvt Ltd. Despite you being aware that Mr. Sushant Chhabra was privy to the presentations and discussions of the rival resolution plan, no objection was raised towards his becoming joint resolution applicant at the advance stage of resolution process. His association with the Conquerent at that stage of resolution vitiates the entire process as it puts the other resolution applicant in disadvantageous position. You in your reply to DIR had attempted to explain that Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is observed that Mr. Sushant Chabbra, who is a joint Successful Resolution Applicant (SRA) is a suspended director of CD. You in your reply to IA have stated that the CD has been registered as a micro, small and medium enterprises (MSME) since 2007 and in support thereof, you have attached Udyog Aadhar Registration Certificate dated 31.10.2017. It is your contention that since CD has been a MSME, certain ineligibilities under section 29A of the Code were not applicable to Mr. Sushant Chabbra in becoming resolution applicant in terms of Section 240A of the Code. which provides as under: "240A. Application of this Code to micro, small and medium enterprises. 1. Notwithstanding anything to the contrary contained in this Code, the provisions of clauses (c) and (h) of section 294 shall not apply to the resolution applicant in respect of corporate insolvency resolution process [or pre-packaged insolvency resolution process] of any micro, small and medium enterprises." iii. It is further noted that in response to IA's e-mail dated 31st May 2023 seeking to ascertain the veracity of the MSME certificate of CD and its status on the commencement of CIRP, Deputy Director, Office of D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm the conditions referred to in sub-section (2) vii. As per section 30 (2) of the Code, it was your duty to examine each resolution plan and confirm that the plan does not contravene any of the provisions of the law for the time being in force. It is, however, observed that despite CD not being a MSME at the time of commencement of CIRP of the CD, you allowed submission of the resolution plan by ex-director of the CD as one of joint resolution applicants on the premise that CD is a MSME. viii. It has further come to notice that you were RP in another Corporate Debtor i.e., Unitech Machines Limited also, and Mr. Sushant Chabbra happened to be an ex-director in that Corporate Debtor also. In the said Corporate Debtor, you had filed an application for avoidance transactions in 2020 during the same time when resolution plan of Conquerent and Mr. Sushant Chabbra was under consideration in CoC of the CD. In the said avoidance application, you had made Mr. Sushant Chabbra as a respondent. However, the said fact was not discussed with CoC while discussing the eligibility of Mr. Sushant Chabbra as a co-resolution applicant for CD. vii. In view of the above, the Board is of the prima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the eligibility of Mr. Sushant Chabbra as a Joint Resolution Applicant for Corporate Debtor. 11. In light of the new information received by IBBI, in the opinion of the Court, the foundation of the Second SCN is based on a different issue altogether. Thus, Petitioner's thrust of arguments that SCN is only a mirror copy of the First SCN and the principles of res judicata would apply, is not appealing. The concerns with respect to Mr. Chabbra's eligibility as dealt with pursuant to the Second SCN were not raised in the First SCN. One of the main functions of IBBI is to investigate the conduct of its registered Insolvency Professionals. Cancellation of Corporate Debtor's MSME certificate and non-disclosure by Petitioner of Avoidance Application against Mr. Sushant Chabbra comprises of new information that ought to be dealt with by IBBI de novo. Therefore, Petitioner's contention that the Second SCN is passed on the same cause of action as the First SCN, in the opinion of the Court, is devoid of merit. 12. As regards the ground of non-compliance of Section 30(2) of the Code, Mr. Sehgal has argued that the Petitioner was in ignorance of the cancellation of MSME certificate of Corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X
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